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16 March 2013

Airbus might take over Spirit St.Nazaire French plant

Spirit´s 5378
m2 facility in Saint-Nazaire is dedicated to receive center fuselage frame sections
from USA, assembly them and deliver to Airbus plant the “section 15” of the
A350 XWB. The plant employs 24 and at
full production, it will employ about 75.

Spirit has
been identified as a critical Tier1 and a very close monitoring team is onboard,
reporting directly to Didier Evrard A350 Program Director.

Based on the article
published in Les Echos and Challenges (where is quoted a French CFE-CGC union
leader, Francoise Vallin), Airbus is talking with Spirit AeroSystems about the
possibility of buying Spirit’s assembly plant in Saint-Nazaire, in order to get
the program back on track.

The move
could be a “dent to Spirit’s credibility as a major structures supplier,” said RBC
Capital Markets aerospace analyst Robert Stallard.

“Production
can be equally, if not more risky, than development, first flight and
certification,” Stallard wrote. “Today’s report suggests Airbus is being
proactive with (Spirit). … Risk will remain in the program well into the
production ramp.”

Other aerospace
analysts consider that the move could be positive for Spirit, because it could
reduce the company’s risk on the program. Spirit’s filing with the Securities
and Exchange Commission said that the company had received additional assistance
from Airbus on the program and was working to have its production certificate
restored.

“If Airbus
were to purchase the facility, we believe it could reduce some of Spirit’s risk
on the A350 program,” Pearlstein said in the report. “We believe most of the
dollar value of Spirit’s content is in the manufacturing in North Carolina and
so moving the assembly facility to Airbus should not cause a large drop in its
content.”

“But Airbus
has been open about the delays coming from Spirit and it may be able to reduce
the A350 schedule risk by insourcing the facility,” Pearlstein wrote.
“Therefore, if not much revenue is at stake, but the risk could be reduced, it
could be positive for the A350 program and Spirit.”

The change
could be positive and negative for Spirit, said Teal Group analyst Richard
Aboulafia. “It depends
on the terms,” he said.

It could give
Spirit more resources and allow the company to focus financial and engineering
resources on other challenges, he said. “On the other hand, it cuts back on
their plan to diversify their workforce portfolio.”

Selling the
plant to Airbus would affect Spirit jobs in France, Aboulafia said.

“It would
probably mean Airbus personnel would take over these activities unless they
were offered jobs,” he said. “I would assume they would replace them with their
people.” On the other hand, Spirit would have more resources to focus
elsewhere. “I would assume it doesn’t mean that Spirit’s role (on the A350)
goes away completely,” he said.

Based on the
article “Airbus va reprendre son sous-traitant américain Spirit” published in Challenges